early redemption charge question

motomoto_2 · 1 July 2014 at 11:55AM

hello

I'm new to this board and have a question I hope someone might be able to help with please ?

I have been making o/p on my mortgage with a view to clearing it early however I have a early repayment charge of almost £1500 for the life of the mortgage ( it was a 25 year fix ) so i'm unsure if there's anyway round this ? i.e. can i reduce it so that it is just a nominal amount or something ?

thanks in advance

Realopinion · 1 July 2014 at 12:29PM

Your mortgage lender must allow you to make contributions to reduce your mortgage without you incurring a penalty charge. There was a recent statement made about this, although most lenders still levy an Admin Fee for the overpayment.

The Early Mortgage Repayment Charge is normally levied if you clear the mortgage during the initial fixed term of the mortgage. Once outside of this term, you should be able to clear the mortgage and not incur the EMRC.

The idea behind the EMRC is that you have gotten a beneficial rate from the lender and agreed a contract of X years with them. By paying it off early they don't get the interest they'd agree you'd pay during your fixed term. The EMRC penalises you for this.

If you can, ask what they will accept as an OP each month without you incurring any charges.

I think it is very refreshing to see someone looking to pay off their debts early and not just live in the interest only zone. Good on you!!

motomoto_2 · 1 July 2014 at 4:53PM

Thanks for reply. I am allowed to make a maximum o/p per month of £499.99 without penalty. The early redemption charge is payable until the end of the mortgage ( in 2032 !!!! ) I'm very much hoping to clear it much sooner than that and would like to somehow not have to pay the charge ????